Should moving expenses for two mobile homes that I rent out be expensed or capitalized on my tax return?

by Daria D. Palaschak, CPA | Mar 05, 2019
I own two mobile homes that I rent out. The expenses I incurred for moving the mobile homes to my land cost $2,000 each. Should the moving costs be expensed or capitalized on my tax return? Does it matter which way I do it, or is it required to be a certain way? 

Generally, all costs incurred to acquire and place an asset into service are required to be capitalized. So, if you purchased the mobile homes, then needed pay to have the mobile homes moved onto your property to rent them out, you would be required to capitalize the $2,000 for each mobile home. This would increase the basis of each mobile home, which you are able to depreciate since you are renting them out. In other words, you will recover the $2,000 you paid for moving each mobile home through depreciation over the life of the mobile home.

If the facts were different and the mobile homes were already placed in service (already being rented) before the move, you may be able to currently expense the moving cost. For example, if you needed to move them from one location to another for a business reason, such as issues with the land they were previously sitting on (flooding, environmental reasons, safety of the area, etc.).

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Answered by: Daria D. Palaschak, CPA, is a tax partner with Sisterson & Co. LLP in Pittsburgh, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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